US STOCKS-S&P 500, Nasdaq drop as tariffs spark recession fears

By Sruthi Shankar and Pranav Kashyap

March 31 (Reuters) - The S&P 500 and the Nasdaq fell on Monday, with technology stocks leading declines, as investors steered clear of risk-laden assets on worries the Trump administration's upcoming tariff plans will hurt economic growth.

Global stocks tumbled, gold prices scaled new highs and U.S. government bonds climbed after U.S. President Donald Trump said on Sunday that reciprocal tariffs he is set to announce on Wednesday will include all nations.

He has already imposed tariffs on aluminum, steel and autos, along with increased tariffs on goods from China.

"There's a lot of uncertainty related to (Trump's) announcement," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

"Many industries have begun to feel the impact of the tariffs that have been announced and are making assumptions about what's likely to follow. That is driving expectations economic data will continue to be somewhat weak and prices may very well be moving higher."

U.S. stock markets have sold off this year as the Trump administration's tariff policies raised fears of a global trade war that would hurt economic growth and spur inflation.

The three major U.S. indexes are on track for sharp monthly and quarterly losses, with the S&P 500 .SPX and the tech-centric Nasdaq .IXIC poised for their steepest quarterly drops in three years.

By 11:43 a.m. ET, the Dow Jones Industrial Average .DJI edged up 0.25% to 41,688.71, helped by gains in UnitedHealth UNH.N and Home Depot HD.N.

The S&P 500 .SPX lost 27.28 points, or 0.49%, to 5,553.66, and the Nasdaq Composite .IXIC fell 240.50 points, or 1.39%, to 17,081.65.

Tech stocks were the worst hit, with Nvidia NVDA.O falling 3.9% and Microsoft MSFT.O down 2.2% as investors worried about companies' AI spending plans.

Tesla TSLA.O fell 4% after Stifel lowered the electric-vehicle maker's delivery forecast ahead of Wednesday's first-quarter report.

The S&P 500 consumer staples sector .SPLRCS, often considered as a safe haven within stock markets, rose about 1.2%, while the energy index .SPNY jumped 1.3%, tracking a jump in crude prices.

The domestically focused Russell 2000 index .RUT was down 2.4%.

The CBOE Volatility index .VIX, Wall Street's so-called fear gauge, jumped to a two-week high of 22.44 points.

As a result of tariff uncertainties, Goldman Sachs raised the probability of a U.S. recession to 35% from 20%, cut its year-end target for the S&P 500 to 5,700 and forecast more interest rate cuts by the Federal Reserve.

Focus this week will also be on economic data including ISM business activity surveys and the crucial non-farm payrolls report. Also due this week are speeches from several U.S. central bank officials including Fed Chair Jerome Powell.

Drugmakers' shares slid after reports the U.S. Food and Drug Administration's top vaccine official had been forced to resign. Moderna MRNA.O dropped 8.7%, while Pfizer PFE.N fell 0.9%.

Gene therapy companies Taysha Gene Therapies TSHA.O and Solid Biosciences SLDB.O fell 25% and 11.7%, respectively.

Declining issues outnumbered advancers for a 1.53-to-1 ratio on the NYSE and a 2.34-to-1 ratio on the Nasdaq.

The S&P 500 posted 24 new 52-week highs and 45 new lows, while the Nasdaq Composite recorded 29 new highs and 501 new lows.